On 12 February 2026, the EBA published an opinion advising national competent authorities (NCAs) on the actions to take once the transition period under its June 2025 No‑Action Letter ends on 2 March 2026. The transition period was introduced to manage the regulatory overlap between MiCA, under which electronic money tokens (EMTs) are treated as cryptoassets, and PSD2, under which EMTs also constitute electronic money and may give rise to payment services requiring authorisation.

In its 2025 No‑Action Letter, the EBA clarified that only a subset of EMT‑related activities (including certain transfer services and custody/administration of EMTs) may constitute payment services under PSD2. It also advised NCAs to adopt streamlined authorisation processes and to delay requiring dual authorisation until the end of the transition period.

With that deadline approaching, the new opinion outlines three scenarios for cryptoasset service providers (CASPs) wishing to continue providing EMT services that qualify as payment services:

1. CASPs already authorised (or operating via an authorised PSP): Firms holding payment institution or e‑money institution authorisation or partnering with an authorised provider may continue operating without interruption.
2. CASPs with a pending PSD2 application: CASPs that have submitted a complete application, engaged proactively with supervisory queries, and have no significant breaches under MiCA or AML rules may be permitted to continue providing EMT‑related payment services temporarily. During this period, firms must cease marketing these services and refrain from onboarding new customers.
3. CASPs without an application or failing to meet conditions: Firms that do not apply, or whose applications do not meet the required standards, must cease EMT‑related payment services from 2 March 2026 and off‑board affected clients.

The EBA notes that more than 100 CASPs have already approached NCAs or filed applications since the No‑Action Letter was issued. The guidance is intended to help NCAs prioritise authorisation work and ensure a consistent supervisory approach during the transition to the forthcoming PSD3 and Payment Services Regulation frameworks.

For more on this development, take a look at this Our Thinking article.

As our Financial Services team in Frankfurt recently highlighted, the German Federal Ministry of Finance and the Federal Ministry of Justice have launched an evaluation of the Electronic Securities Act (eWpG). The Electronic Securities Act has been in force since 2021 and provides a civil-law framework for issuing electronic securities, including DLT-based crypto securities (certain shares, debt securities and fund units).

The goal of the evaluation is to assess whether investor protection, market integrity, innovation support and AML measures have proven effective. Market participants are invited to share experiences and suggestions for improvements, for example on:

• the practicality, clarity and legal certainty of the rules for issuing electronic/crypto securities;
• a possible extension of the regime to other asset classes;
• the level of investor protection compared to traditional securities;
• international competitiveness of the regime; and
• a possible EU harmonization of the rules for issuing electronic securities, including the preferred type of regime (harmonization of national crypto-securities laws vs. a parallel EU 28th regime).

Feedback should be submitted by 15 March 2026.

On 2 February 2026, it was reported that Hong Kong is preparing to issue its first stablecoin issuer licences in March 2026, with only a “very small number” of successful applicants expected in the initial batch. According to Hong Kong Monetary Authority (HKMA) Chief Executive Eddie Yue, the regulator is nearing completion of its review of the first tranche of applications, with assessments focused on use cases, risk management, anti money laundering controls and the quality of backing assets.

Speaking separately at the Consensus Hong Kong conference, Hong Kong Financial Secretary Paul Chan reiterated that licences would only be granted to issuers demonstrating credible and sustainable business models, strong compliance capabilities and clear real economy use cases. He added that Hong Kong is also finalising its new custodian service provider licensing regime and is preparing additional legislation to complete its digital asset regulatory framework.

According to reports, the HKMA confirmed that licensed issuers will need to comply with rules governing cross border activities, with potential future mutual recognition arrangements expected to be explored with overseas regulators.

Chan also reportedly pointed to several trends shaping Hong Kong’s digital asset strategy, including:

• rapid institutional adoption of tokenised real world assets;
• increasing interaction between DeFi and traditional finance; and
• the emergence of a “machine economy”, where autonomous AI agents may hold and transfer digital assets, pay for services and transact on chain.

These developments, he stated, underscore the need for a comprehensive and future proof regulatory framework.

On 26 January 2026, Japan's Financial Services Agency (FSA) opened a public consultation, running until 27 February 2026, on detailed draft rules governing the reserve assets for regulated stablecoins issued through trust structures under the country's amended Payment Services Act. The consultation package sets out proposed criteria for determining which bonds may be used as backing assets and forms part of the FSA's implementation of Act No. 66 of 2025, which overhauled Japan's regulatory framework for settlement and electronic payment instruments.

Under the proposed standards, only a limited class of foreign‑issued bonds would be eligible as collateral. The bonds must (i) carry a high credit rating corresponding to credit risk category 1–2 or better from a designated agency, and (ii) be issued by an entity with at least ¥100 trillion (approximately USD 648 billion) in outstanding bonds. The intention is to anchor reserves in liquid, secure and transparent assets, thereby reducing credit and liquidity risks for users of yen‑pegged stablecoins.

In parallel, it was reported that the FSA has proposed new supervisory guidelines for banks, insurers and subsidiaries offering crypto intermediation services. A new clause would require subsidiaries providing crypto‑related services to give clear explanations of product risks to customers, aiming to avoid misconceptions that cryptoassets are low‑risk merely because they appear within a traditional financial group structure. The consultation also introduces additional checks for businesses seeking to handle foreign‑issued stablecoins, including demonstrating that the overseas issuer will not issue, redeem or solicit stablecoin transactions from Japanese users. The FSA indicated plans for greater information‑sharing with overseas regulators as part of this oversight.

These proposals sit against a backdrop of expanding domestic stablecoin innovation, including Japan's first legally recognised yen‑backed stablecoin launched in late 2025, as well as pilots across the country's three megabanks exploring stablecoins and tokenised deposits for payments, settlement and institutional financial services.

On 10 February 2026, the FCA announced that it has begun legal proceedings in the English courts against global crypto exchange HTX (formerly Huobi) and persons unknown (being those individuals who operate and control HTX) seeking both an injunction preventing the defendants from promoting cryptoasset services to UK consumers in breach of the FCA's rules on financial promotions and a declaration that the defendants are in breach of these rules. This is the first FCA enforcement action of its kind.

Take a look at this Our Thinking article for more on this development.

On 25 February 2026, the FCA announced that it has chosen four firms to test how their stablecoin services work with its proposed regulation in the ‘safe environment' of its Regulatory Sandbox. The 4 firms are Monee Financial Technologies, ReStabilise, Revolut and VVTX.

The FCA's testing will focus primarily on stablecoin issuance and the four firms will pilot a range of use cases, including payments, wholesale settlement and crypto trading. Testing begins in Q1 2026 and the findings will help to shape the UK's final stablecoin rules later in 2026.

On 29 January 2026, it was announced that SEC Chair Paul Atkins and new CFTC Chair Mike Selig had held their first joint SEC-CFTC “harmonisation” event, during which they unveiled Project Crypto, a cross agency initiative to align regulatory approaches, streamline oversight and provide clearer jurisdictional boundaries in U.S. digital asset markets.

Atkins emphasised that the agencies intend to reduce duplicative or conflicting obligations by developing a coherent asset taxonomy, coordinated definitions and minimum effective dose, risk based rules calibrated for integrated on chain trading, clearing, settlement and custody. He noted the agencies’ aim to provide near term clarity while preparing for potential Congressional market structure legislation that could arrive later in 2026.

Selig used his first public remarks as CFTC Chair to outline an ambitious policy agenda, including:

• expanding recognition of tokenised collateral;
• enabling “true” perpetual crypto derivatives and other novel products to trade onshore under U.S. law;
• establishing safe harbours for software developers;
• exploring a retail focused category of exchange registration for leveraged or margined crypto trading; and
• progressing a new rulemaking on event contracts (prediction markets).

Both Chairs confirmed plans for a formal memorandum of understanding to institutionalise coordination on supervision, surveillance and information sharing.

On 23 January 2026, the FCA released consultation paper CP26/4, the latest and most wide ranging consultation in the UK’s crypto regulatory roadmap. CP26/4 sets out how major components of the FCA Handbook – including Consumer Duty, COBS, DISP, training and competence, regulatory reporting, and aspects of the SM&CR – would apply to firms conducting regulated cryptoasset activities under the forthcoming FSMA based regime. Key points to note include:

• The FCA confirms its proposal to apply the Consumer Duty to cryptoasset firms serving retail users, supported by additional guidance illustrating how firms should assess good customer outcomes, evaluate product value and manage disclosure obligations in a digital asset context. Crypto firms would also fall within the compulsory jurisdiction of the Financial Ombudsman Service (FOS), with the FCA setting expectations for formal complaints procedures under DISP, while noting that FSCS protection will not extend to cryptoasset activities.
• On conduct standards, CP26/4 proposes adapting the COBS rulebook for cryptoassets, including new rules for crypto lending and borrowing services and updated “appropriateness” assessments tailored to tokenised and decentralised products. The consultation also details how the Client Assets regime would apply to qualifying cryptoasset custodians and specified investment cryptoasset custodians, reflecting the unique challenges of safeguarding assets that depend on private key management.
• The FCA additionally outlines its proposed location policy, under which most firms serving UK clients would be expected to operate through a UK established legal entity, with limited flexibility for certain international crypto trading platform functions where global liquidity access is essential.

The consultation closes on 12 March 2026. Following consideration of the responses, the FCA will publish policy statements later in 2026 containing its final rules and guidance.

The FCA has also announced that it will open its gateway for cryptoasset permissions on 30 September 2026 and that the regime will go live on 25 October 2027.

For further reading on this topic, see this Our Thinking article.

On 27 January 2026, the Australian Securities and Investments Commission (ASIC) released a new report entitled “Key issues outlook 2026”, in which it identified digital assets, payments innovations and AI‑based financial services as key regulatory perimeter risks for 2026, warning that rapid innovation continues to generate consumer and market harms where activities fall outside formal licensing frameworks.

In the report, ASIC drew attention to unlicensed crypto advisers, misleading conduct by emerging market participants and firms intentionally structuring activity to remain outside regulation. ASIC also noted that decisions on whether new digital asset products should be brought into licensing regimes ultimately rest with government, but that the regulator will prioritise monitoring boundary issues, strengthening oversight and addressing regulatory uncertainty where it risks undermining consumer protection. These concerns emerge amid growing domestic crypto engagement, with Australia ranking among the world's highest crypto‑adoption markets.

On 29 January 2026, the House of Lords Financial Services Regulation Committee launched a wide-ranging inquiry into the growth, use and proposed regulation of stablecoins in the UK. The Committee notes that stablecoins have been developing in the UK and globally since around 2014 and seeks evidence on how the market's scale, characteristics and use cases have changed over time. It is particularly interested in how sterling‑denominated stablecoins may emerge in practice, the potential competitiveness benefits they could offer to the UK as a financial centre, and the risks they may pose to consumers, financial stability, market integrity and monetary sovereignty.

The Committee is also examining the regulatory regimes proposed by both the Bank of England and the FCA, including whether the UK's dual regulatory model – under which the Bank would supervise systemic stablecoin issuers and payment systems while the FCA would regulate non‑systemic issuance and conduct – provides proportionate, coherent and effective oversight.

Written submissions are invited until 11 March 2026. 

On 22 January 2026, it was reported that Thailand's Securities and Exchange Commission (SEC) is preparing a broad expansion of the country's digital asset investment framework with new rules aimed at enabling a wider range of regulated products and strengthening market infrastructure.

According to the SEC, forthcoming measures will include formal guidelines for crypto exchange‑traded funds, permitting licensed asset managers to offer regulated exposure to digital assets through on‑exchange vehicles, as well as rules to allow crypto futures trading on the Thailand Futures Exchange. The SEC is also expected to extend the existing tokenisation regime to cover a wider set of investment‑grade tokenised instruments, including bond tokens, tokenised fund units, and other on‑chain representations of traditional securities.

The SEC indicated that the upcoming rules are intended not only to expand product availability but also to raise investor protection standards and to respond to international developments in tokenised assets, crypto ETFs, and derivatives markets. 

On 28 January 2026, it was reported that Pakistan's Virtual Assets Regulatory Authority (VARA) leadership has highlighted regulatory clarity as central to the country's digital asset strategy. The VARA chairperson indicated that Pakistan intends to move “from confusion to clarity,” establishing a regulatory framework designed to attract capital, support domestic founders and provide a platform for innovation across regions spanning Morocco to Malaysia.

The regulator also referenced Pakistan's partnerships with international crypto firms as part of a broader ambition to position the country as a competitive hub for Web3 development. 

On 4 February 2026, the government published the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 (SI 2026/102), which establish the regulatory framework for qualifying cryptoassets, qualifying stablecoins and specified investment cryptoassets. This follows the laying of the Regulations before Parliament, as reported in our January 2026 edition.

The Regulations amend the Financial Services and Markets Act 2000 (Regulated Activities) Order (RAO) to define new categories of regulated cryptoassets and to specify regulated activities, including issuing qualifying stablecoins, operating cryptoasset trading platforms, safeguarding qualifying cryptoassets and providing staking services. The Regulations also introduce designated activities under Part 5A FSMA for public offers and admissions to trading, including prohibitions on making public offers of qualifying cryptoassets unless falling within prescribed exceptions.

Additionally, the Regulations establish a cryptoasset market abuse framework, addressing insider dealing, unlawful disclosure of inside information and market manipulation in relation to relevant qualifying cryptoassets. A series of consequential amendments are also made to align anti‑money laundering and financial promotion rules with the expanded perimeter.

The Regulations will come into force on 25 October 2027. HM Treasury is required to review the Regulations within five years of commencement and subsequently at five‑year intervals.

On 29 January 2026, it was reported that the Central Bank of the UAE (CBUAE) had approved the country's first USD‑backed stablecoin – USDU - under its Payment Token Services Regulation (PTSR), marking a major step in the UAE's regulated stablecoin framework.

USDU is fully backed 1:1 with U.S. dollars, held in safeguarded onshore accounts at Emirates NBD and Mashreq, with monthly reserve attestations. Under the PTSR, only fiat or an approved Registered Foreign Payment Token can be used for digital asset payments and derivatives, making USDU the first compliant USD settlement option within the UAE's regulated framework.

The approval positions the UAE as one of the first jurisdictions globally to license U.S. dollar-denominated payment tokens under a dedicated regulatory regime. 

On 23 February 2026, the European Parliament's Committee on Economic and Monetary Affairs (ECON) published a draft report on the challenges posed by digital assets for the competitiveness and integrity of the EU's financial system. The draft report:

• Contains a draft European Parliament legislative resolution, which explores the impact of the emergence of digital assets on the financial services sector and its meaning for the regulatory framework, in particular under the Markets in Cryptoassets Regulation ((EU) 2023/1114) (MiCA) and the DLT Pilot Regime Regulation ((EU) 2022/858).
• Highlights several risks that remain for the digital assets sector and addresses the following topics:
  • Cryptoassets: The importance of strengthening data capabilities is emphasised. Relevant regulatory bodies are called on to strengthen the supervisory dialogue on significant multi-function groups (MFGs) and the need to align the policy framework under MiCA for significant non-bank MFGs is underlined. The fact that cryptoassets are still too often used to evade anti-money laundering and counter-terrorism financing regulations and sanctions is also highlighted.
  • Stablecoins: The Commission is called on to urgently propose legislation providing legal clarity on the possibility of multi-issuance of stablecoins by an EU and a non-EU entity, where the digital stablecoins issued by both entities are fully fungible and indistinguishable. Strong prudential safeguards, robust co-operation arrangements and enhanced crisis management protocols are also called for.
  • Tokenisation: In light of the ongoing discussions on the DLT Pilot Regime, the explanatory memorandum acknowledges that trial and error is still necessary to discover the advantages of tokenisation and highlights the ongoing need to monitor vulnerabilities.
  • Interoperability: This is crucial in digital finance, and the assessment of legal entity identifier and verifiable legal entity identifier-type approaches as infrastructure-grade tools is also important.

On 29 January 2026, the Bank of England published a speech by Sasha Mills, Executive Director, Financial Market Infrastructure, entitled: 'The sky's the limit: shaping the UK's digital financial future.' Key points from the speech include:

• 2026 is going to be ‘fundamental in shaping the UK's digital financial future'.
• This year, the Bank will prioritise three key areas of innovation: (1) systemic stablecoins (including working with the FCA to test the use of regulated stablecoins as a settlement asset in the Digital Securities Sandbox (DSS)), (2) clarifying the Bank's policy on the treatment of tokenised collateral under UK EMIR, and (3) the DSS.
• The Bank aims to finalise the regime for systemic stablecoins, working with the FCA, by the end of this year.
• It will set out further policy later this year on how tokenised collateral can operate under the existing regulatory framework. Firms are encouraged to reach out and continue the conversation with the Bank – whether on emerging opportunities or practical challenges.
• As wholesale activity in the DSS is subject to limits on overall issuance to contain risks to the broader financial sector, it offers a helpful environment to test the use of stablecoins for wholesale settlement in a controlled setting. The Bank is continuing to expand the remit of the DSS to facilitate responsible innovation.
• It is working ‘at speed' with the FCA and HM Treasury (HMT) to expand the range of settlement assets in the DSS to include regulated stablecoins.
• It is also developing an assessment framework to help it determine a set of regulated stablecoins – issued both domestically and in other jurisdictions – that meet high enough standards for use in the DSS, eg the Bank will set out criteria around, among other things, the quality and composition of backing assets, ability to meet redemptions, and capital requirements.
• The Bank is also working with the FCA to consider the ecosystem around stablecoin use in wholesale markets, and whether certain guardrails are appropriate, eg the suitability of different custody solutions, their compliance with proposed FCA custody requirements, and ways of obtaining stablecoins for use in the DSS. Domestic stablecoins which meet the high standards of the Bank's systemic stablecoin regime will be permitted in the DSS.
• There is also mention of the September 2025 launch of the HMT and U.S. Treasury's Transatlantic Taskforce for Markets of the Future. As digital assets are a focus of the Taskforce, the DSS provides a ‘valuable opportunity to share learnings and identify areas for cross border cooperation.'

On 28 January 20206, ESMA published a webpage with the official translations, including the English language version, of its guidelines for the criteria to assess knowledge and competence under the Regulation on markets in cryptoassets ((EU) 2023/1114) (MiCA). The guidelines will apply from 28 July 2026.